Where to invest your pension savings

COLOMBIA - In Brief 22 Jan 2026 by Andrés Escobar Arango
The government published a draft decree that would limit mandatory pension fund (AFPs) investments abroad to 30% of their total portfolio across all risk profiles. Within three years, pension funds would have to reduce their maximum allocation to foreign assets to 35%, and within five years to the aforementioned 30%. As of December 2025, AFPs had 48.2% of their portfolios invested abroad. Implementing the decree would therefore result in the repatriation of nearly USD 26 billion (COP 96.4 trillion) over the next five years. Furthermore, this cap must align with the current asset-class limits for the different risk profiles managed by the pension funds. The decree hits a nerve: as Figure 1 shows, pension funds allocate 15% of their portfolios to foreign private equity funds and a measly 2% to local private equity funds. Colombian workers are funding investment projects worldwide while the Colombian private equity industry remains underdeveloped. Insiders wonder whether there are enough investment projects in Colombia to justify bringing that money back to the country and argue that a sound diversification justifies the current allocation between Colombia and abroad. Why isn’t there more investment in Colombia? Is the cost of capital too high? Colombia has many infrastructure and power generation needs right now. We could name several infrastructure projects that are needed and would benefit from the repatriation of these resources. If it’s not profitable for Colombian workers to invest in the infrastructure that would make their jobs and industries more competitive and profitable, the country is in a conundrum. In its justification, the government argues that it is nece...

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